PNOC Exploration Corp., the upstream oil and exploration arm of state-run Philippine National Oil Co., is planning to resume its large-scale coal trading by 2013 to shore up its revenues and its contribution to the national coffer.
“There is no reason for us not to [pursue] coal trading because one, it is a profitable venture and two, PNOC EC needs the money to fund its projects,” said PNOC-EC chairman Gemiliano C. Lopez Jr.
Lopez said they were still firming up the guidelines that would govern future coal trading transactions to ensure that all deals would be above board and conducted in the most transparent manner.
These guidelines, Lopez added, were meant to weed out irregularities that have allegedly marred coal transactions in the past. The irregularities, which included overpricing by allowing the purchase of low quality coal and anomalies in coal deliveries, reportedly resulted in losses of about $10 million (P420 million) in a single year alone.
Due to these losses, coal trading operations have been suspended for more than a year now, according to Lopez.
Meanwhile, Lopez disclosed that the company has secured the commitment of more banks to provide loan facilities, thus increasing the available “standby funds” of PNOC-EC to more than the current P19 billion.
The amount may be tapped to finance the company’s proposed and ongoing projects.
Lopez, however, declined to identify the banks.
Government data made available early this year showed that PNOC-EC has an existing P5.21-billion credit line facility with BNP Paribas; P2 billion with Philippine National Bank; P1.85 billion with the state-owned Land Bank of the Philippines; P1.82 billion with Standard Chartered Bank, and P1.62 billion with HSBC.
The company has previously secured funding from several other local banks, including Development Bank of the Philippines, UCPB and the Ayala-led Bank of the Philippine Islands, among others, for P2 billion each.
PNOC-EC is expected to invest P20 billion between now and 2016 for the “further exploration, exploitation, development and marketing of oil, gas and coal deposits in the Philippines.”
Lopez earlier said that the company’s board of directors has approved the “long range” plan, which also included the construction of power plants to further boost the country’s electricity supply, exploration of prospective coal and petroleum areas, and the takeover of compressed natural gas (CNG) facilities owned by Shell Companies in the Philippines to boost the use of this alternative fuel for transport.